How to invest in a kid's future: buy shares
Any youth group can sell candy.
The Boys' and Girls' Clubs of Edmonton took a different approach to fund-raising this year: They sold shares in the futures of the kids themselves.
For $1,500, payable in three $500 installments over three years, Edmontonians looking to donate creatively could buy a "Class A share" on the club's "Futures Exchange." The immediate reward is a receipt for tax purposes. But there is a longer-term payoff too - for both the investors and the young people.
"By the time we turn 35, they get 1 percent of our gross income," says teen Carmen Miller, who met her "shareholder" at a recent luncheon organized by the clubs. "We thought it was a good idea."
"We signed up for it," says Lori Bonneux, like Carmen a participant in one of the clubs' teen-leadership programs. "And every year we give them an annual report on what we've done."
The 1 percent commitment, a one-time payment, is a moral rather than a legal contract. And it's the Boys' and Girls' Clubs that get the up-front capital, not the kids, though the funds are spent on their behalf.
But the commitment seems to have got the kids thinking. Says Carmen, who wants to go into forensic sciences after she completes her education: "I want to make my shareholder proud of me."
"If I drop out of school," says Lori, who wants to study psychology and go on to work with children, "I'd be disappointed. I wouldn't be able to make enough for my shareholder. She'll be retired by then. I want her to be happy she invested."
Kerry Harty, who conceived the program, thinks it will work because it's what he did himself as a young man. To help finance his own education as a "mature student" after he was married, this former high school dropout sold "shares" in himself to the three willing investors he was able to find: his father and two of his professors. When he turned 35, he paid them off - with 1 percent of his gross earnings as vice president of RBC Dominion Securities here, $5,000 (Canadian; US$3,300) apiece.
"The people who bought shares in me were taking a risk," he says. "This guy could have gone either way."
Of the program at the Boys' and Girls' Clubs, Mr. Harty says, "The whole idea of issuing a share is to assign value." The kids have been told that if they get into trouble with the law, for instance, their share price goes down - figuratively that is, because there is no plan to have the shares "traded."
But, Harty continues, "we're trying to create a link in the kids' minds between present and future, to make them realize that the decisions they make today have an impact on their life at 35.
"This is profound. This is a form of self-actualization."
To make the share-offering as realistic as possible, each of the young people wrote up a "prospectus" on himself or herself, listing such key data as grade average in school and further educational plans.
"When I looked at some of those prospectuses, I could see that some of these kids are from pretty tough backgrounds," says Harty.
Karen Ramsey, director of youth programs for the Boys' and Girls' Clubs of Edmonton, concurs. "Some of these kids have shrapnel in them," she says, noting that some are recent immigrants or even refugees.
Harty speaks from experience. His first job, at age 10, was as a sort of junior bouncer at a dance hall. He was given a whistle and stationed at the back door to keep an eye out for patrons who would let their friends in without paying.
For this he got $20 a night - and exposure to what he today calls a "sordid environment" of alcohol and illegal drugs. Also, he and his three sisters tended their mother in a serious illness at home for seven years, which made him drift in and out of school. Once she was hospitalized, they tried to keep the Department of Social Services from realizing they were home alone. She died when he was 13.
Today, Harty says, "I thank God I came out of it unscathed." One of the turning points for him, he says, was "the realization that nobody owes me a living."
He wants to convey this message to the young people he works with. "I understand how they think. They don't think about age 35 - they think about survival. They are forced into that mode of necessity. We hope to bring them out of that."
Although the Futures Exchange isn't really intended as a mentoring program, "investors" express appreciation for the innovative concept. "It makes it more of a one-on-one thing rather than just writing a check for charity," says Edmonton lawyer Daryl Becker.
In its first year, the Futures Exchange has drawn in $37,000, less than the hoped-for $60,000 but enough to get expressions of interest from youth groups across North America.
Mike Meadows, director of resource development for the Boys' and Girls' Clubs of Canada, in Mississauga, Ontario, calls the Edmonton program "an excellent model" and hopes to take it nationwide soon.
"We're seeking a national sponsor within the securities industry," he says. "We expect to have a sponsor to roll out in the third quarter of this year."